China Company Registration Welcomes New Tax Cut Starting on May 1

Source: CHINA DAILY

China will cut value-added tax (VAT) rates as part of a tax reduction package amounting to 400 billion yuan (about $63 billion) this year.

The decision was made at a State Council executive meeting chaired by Premier Li Keqiang on Wednesday. It is expected to boost high-quality development.

The tax rate, starting from May 1, will be lowered from 17 percent to 16 percent for manufacturing, and from 11 percent to 10 percent for transportation, construction, basic telecommunication services and farm produce.

Li said that the VAT reform was a major step in China's tax regime reform.

"The VAT reform has helped to reduce the overall corporate tax burden, and improve the tax regime. The reform has proven to be conducive to the transformation and upgrading of the economy, unifying the tax structure and making taxation fairer," Li said.

This round of tax cuts will apply to all manufacturing companies. All businesses registered in China, be they joint ventures or wholly foreign owned companies, will be treated equally, according to the premier.

The VAT reform was first piloted in Shanghai before it was rolled out nationwide. It has delivered a total tax cut of 2.1 trillion yuan over the past five years.

The services sector has expanded significantly as a result. Its added value rose to 51.6 percent of GDP in 2017, according to the National Bureau of Statistics.